Purdue Pharma Scrambles To Discourage A Justice Department Appeal of Bankruptcy Deal
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Purdue Pharma headquarters in Stamford, Conn., April 2, 2019. With a federal judge poised to approve the company’s controversial Chapter 11 plan, the company is working behind the scenes to preempt a legal challenge by the Department of Justice.
Drew Angerer/Getty Images
Drew Angerer/Getty Images
Judge Pushes Back On Protections For The Sacklers In The Purdue Pharma Bankruptcy
There is no mention in the document of the company’s role launching the effort or crafting the message.
The preemptive pressure campaign comes as federal Judge Robert Drain has signaled he will approve the plan Wednesday at a hearing in White Plains, N.Y.
Three sources with close knowledge of the effort described it in detail to NPR.
Two of the individuals suggested Purdue Pharma was engaged in a good-faith bid to protect a fragile settlement, which has gained backing from most of the state and local governments that sued the Sacklers and their drug company.
A third source expressed discomfort with the company’s efforts to dissuade the DOJ from filing an appeal.
All three indicated a Justice Department challenge of a confirmed plan appears likely, though not certain.
They agreed to speak only on background because of the sensitive nature of last-minute negotiations aimed at building additional support for the deal.
The letter warns that any Justice Department appeal would «jeopardize the delivery of billions of dollars» to communities struggling with high rates of addiction, overdose and death.
The document’s language suggests Purdue Pharma hoped it would eventually be signed by state attorneys general, local government officials, hospitals and a group representing individual victims of the company’s opioid products.
Purdue Pharma declined to answer questions about the letter or the bankrupt company’s bid to influence DOJ decision-making.
Justice Department Blasts Purdue Pharma’s Bankruptcy Plan
The Justice Department hasn’t said conclusively whether it will challenge the settlement in court and declined NPR’s request for comment.
The Justice Department has condemned the deal
The deal has sparked intense controversy in part because it would grant broad immunity from opioid lawsuits to members of the Sackler family as well as hundreds of their associates.
The Sackler’s remaining empire — including drug companies headquartered overseas — will be sheltered from opioid liability as will other independent firms that partnered with Purdue Pharma.
The Sacklers would admit no wrongdoing and will remain one of the wealthiest families in the world.
In return, they would pay more than $4.3 billion over the next decade, most of which would go to fund drug treatment and other health care programs designed to ease the opioid crisis.
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During a two-week bankruptcy trial that concluded Friday, attorneys for two different branches of the DOJ indicated an appeal is possible.
They argued the liability releases demanded by the Sacklers are unlawful and would violate the constitutional rights of those with potential claims against the family.
In a legal brief, DOJ attorney William Harrington accused the Sacklers of gaming the bankruptcy system to avoid accountability for «alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced in the United States.»
The letter drafted by Purdue Pharma on behalf of the company’s victims urges the DOJ to accept the settlement with the Sacklers.
The letter describes a deal granting family members protection from opioid lawsuits as «imperfect [but] better for those harmed by the opioid epidemic than any other alternative.»
Purdue Pharma has long worked to influence DOJ decisions
Sources knowledgeable about Purdue Pharma’s lobbying effort suggested such efforts were commonplace in complex bankruptcy cases.
They also suggested that the letter drafted by the company would be rewritten before being sent to the Justice Department.
Members of the Sackler family played no role in drafting the document. It was unclear how many organizations involved in the bankruptcy deal might ultimately sign it.
Purdue Pharma has a long and successful history pressuring DOJ decision-makers.
In 2007, the firm’s attorneys pressured Justice Department officials to abandon plans to file felony criminal charges against company executives for illegal opioid marketing schemes.
The Sacklers Want Immunity From The Opioid Crisis For A Long List Of Their Associates
Instead, Purdue officials pleaded guilty to misdemeanor charges and paid more than $600 million in fines.
«At the 11th hour, top political appointees at the Department of Justice blocked those indictments and as a result a much weaker set of plea agreements was entered into with these Purdue executives that really amounted to a slap of the wrist,» said Sen. Maggie Hassan, D-N.H., in a 2019 interview with NPR.
Last year, facing the threat of new federal charges, the company negotiated again with the DOJ.
Purdue Pharma ultimately pleaded guilty to felony crimes for deceptive marketing of OxyContin but there were no individual charges filed against company executives.
As part of that deal, the Sacklers agreed to pay the DOJ $225 million as part of a civil settlement. They weren’t charged with any crimes and admitted no wrongdoing.
Some lawmakers are pushing the DOJ to appeal the Purdue Pharma plan
Purdue Pharma isn’t alone in trying to sway the DOJ’s decision on whether to challenge the bankruptcy settlement after it’s approved.
Earlier this month, four Democratic lawmakers — two U.S. Senators and two House members — wrote a letter to Attorney General Merrick Garland urging him to block implementation of the plan.
«There is still time for the DOJ to play a key role in this case by seeking an immediate direct appeal … on the constitutionality of the plan’s nonconsensual third-party releases,» the lawmakers wrote.
Sens. Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., signed the letter, as did Reps. Carolyn Maloney, D-N.Y., and Mark DeSaulnier, D-Calif.
During the bankruptcy trial, meanwhile, critics of the plan suggested an appeal is all but certain, if it is approved by Drain, the judge.
«We urge you not to make the historic mistake of confirming this plan,» argued Matthew Gold, an attorney representing Washington, Oregon and the District of Columbia, which still oppose the settlement.
«The plan contains fatal flaws [and] will be reversed on appeal,» Gold said during a hearing on Aug. 23.
Supporters of the plan say it will help ease the opioid crisis
But supporters of the plan argue it would distribute money quickly to fund drug treatment and other health care programs designed to ease the opioid crisis.
«A long messy appeal does not help the still struggling people, nor does it help rebuild communities devastated by the crisis,» argued Arik Preis, an attorney representing groups harmed by Purdue Pharma who have embraced the settlement. He also spoke during the August 23 bankruptcy hearing.
Purdue Pharma introduced OxyContin in the late 1990s. Critics say the firm’s aggressive and at times misleading marketing campaigns convinced doctors to prescribe opioids more liberally, helping usher in the deadly opioid crisis.
More than 500,000 Americans have died from fatal overdoses, according to the Centers for Disease Control and Prevention.
By their own reckoning the Sacklers earned more than $10 billion from opioid sales, though they say nearly half of that money went to pay taxes.
Family members who served on Purdue Pharma’s board have said repeatedly they did nothing wrong and acted ethically.
However, documents made public during court proceedings show some family members pushed sales of highly addictive opioid pills long after abuse and overdose rates surged.
During the trial, Drain has pushed those involved in crafting the bankruptcy deal to narrow liability releases for the Sacklers and their associates.
But during a final hearing on Friday, Drain spoke at length about his fear the deal might still be challenged on appeal. He warned that such an appeal would delay distribution of desperately-needed funds.
«One thing that is crystal clear from the record of the trial is that time is no one’s friend,» Drain said.
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